In order to understand better the mechanism of gonadotropin action on steroidogenesis in prematurational follicles of Fundulus heteroclitus, follicle synthesis of 17 alpha-hydroxy, 20 beta-dihydroprogesterone (17 alpha-OH,20 beta-DHP), testosterone (T), and 17 beta-estradiol (E2) from a variety of precursors and the maturational response of oocytes were simultaneously followed in vitro. The addition of 25-hydroxycholesterol, pregnenolone, or progesterone to unstimulated follicles increased media 17 alpha-OH,20 beta-DHP, T, and E2, as well as oocyte germinal vesicle breakdown (GVBD) in a dose-dependent manner. Inhibition of cholesterol side-chain cleavage by aminoglutethimide blocked 25-hydroxycholesterol-promoted steroid accumulation and GVBD, indicating that 25-hydroxycholesterol does not directly induce GVBD, but rather is metabolized in the follicle to an active steroid (presumably 17 alpha-OH,20 beta-DHP). Likewise, trilostane, an inhibitor of delta 5-3 beta-hydroxysteroid dehydrogenase, blocked pregnenolone action. Both inhibitors also completely abolished steroid accumulation and GVBD promoted by a F. heteroclitus pituitary extract (FPE), but not GVBD induced by exogenous 17 alpha-OH,20 beta-DHP. FPE also significantly depressed T but enhanced E2 production from exogenous precursors. We have concluded from these observations that (1) cholesterol side-chain cleavage and pregnenolone conversion to progesterone are essential for gonadotropin-promoted follicle steroid production and the resulting reinitiation of meiosis by the oocyte, (2) the enzymes necessary for the conversion of cholesterol to 17 alpha-OH,20 beta-DHP, T, and E2 are present in the unstimulated, prematurational follicle, and (3) gonadotropin initiates steroidogenesis by acting at a step prior to the conversion of cholesterol to pregnenolone; it also appears to enhance aromatase activity.